Socialism Vs Capitalism : Past, Present, And Future
By Jon Kofas
23 September, 2015
Contemporary civilization and its progress under capitalism are measured largely, though not exclusively, by stock market indicators and the wealth index of corporations and millionaires that mainstream media celebrates. All other issues are only significant if they enhance or diminish corporate wealth. This includes the political, social, environmental issues that may either entail greater profit opportunities or instability and lower profits. “Accordingly, the extent to which corporate democracy represents general, social interests or narrow, profit-oriented interests is largely a function of political contestation and state policy.”
Carl Gershenson, “Protecting Markets from Society: Non-Pecuniary Claims in American Corporate Democracy” Politics and Society (March, 2015, vol. 43, no. 1)
This “corporate measure” of the social contract in modern society is to the exclusion of the misery index in what Frantz Fanon once called “The Wretched of the Earth”, referring to the manner that imperialism determines social class in Africa and the masses’ reaction to create a more socially just society. The conditions Fanon described pertaining to Algerian struggle against French colonialism pertains today to conditions that capitalism universally creates and perpetuates as it always has since its nascent phase in the 15th century when European colonialism and the transatlantic slave trade began. An African-American youth shot by the police in the ghetto in 2015 is just as much a victim of the same class formation that capitalism creates as an Algerian youth fighting against French colonial rule in the 1950s.
The corporate measure of the social contract and a successful civilization based on linear econometric progress of corporations is a sharp deviation from the humanist values of the Renaissance, the Scientific Revolution, and Enlightenment in Western Civilization rooted in creativity, intellectual achievements in everything from the arts to natural sciences, and to the welfare of humanity as a whole. The corporate measure of the social contract is an assertion of elitism and inequality and a rejection of humanist values and social justice.
Apologist of capitalism would of course give credit to capitalism as a system for unlocking human creative potential of such scientific and technological innovation. Since the transition in the 15th century from the Feudal/Manorial social order/mode of production to capitalism there have been phenomenal technological and scientific inventions intended to improve everything from human health and comfort to unlocking the secrets of the universe. The same apologists, however, do not fault capitalism for structural poverty that persists on a world scale; for the countless wars in the name of capturing markets and increasing profits that have resulted in the deaths of hundreds of millions in the last five centuries; for societal violence emanating from socioeconomic inequality; and for human rights abuses and absence of social justice that are invariably at the core of capitalism.
In the post-Communist era, the specter haunting the entire world is neo-liberalism, driving many people to seek alternatives in some form of Socialism. The fall of Communist regimes had their experiments with one-party states and “command economies” in the name of the proletariat in the 20th century. Those regimes failed for a variety of reasons including constant assault from capitalist countries at every level from the costly arms race to counterinsurgency operations and ideological propaganda campaigns. In the early 21st century many people are wondering if the “End of History” celebrating the US Cold War victory over Communism (Francis Fukuyama, The End of History and the Last Man) that marked capitalism’s triumph means anything more than hegemony of the wealthy over the rest of the world’s population in every domain from economy and politics to the arts for profit.
Capitalism under neoliberal policies is indeed without rivals throughout the planet in the post-Communist era where the US remains the world’s sole superpower despite China’s economic challenge. Communism as it operated during the Maoist era no longer exists even in contemporary China that practices capitalism and abides by the same rules of the international market economy and its institutions such as the IMF, World Bank and World Trade Organization. The “end of history” is indeed the end of Communist regimes but merely another step in society’s evolution and the continued struggle between the hegemonic capitalist class and the masses seeking social justice.
Do people around the world look to established Socialist parties for salvation (about 60 countries have socialist parties), or must citizens continue looking and creating grassroots socialist movements to find the best possible “social contract”? Socialist Party politicians know that there is absolutely no resemblance between a European Socialist Party today and the First International (International Workingmen’s Association, 1864-1876), or even the Second International (1889-1916) that dissolved because some European Socialists were more nationalistic than they were Marxist internationalists. Throughout Europe, political parties calling themselves Socialist are no different in representing finance capital to the detriment of the rest of society than conservative parties pursuing neoliberal policies.
Using the argument that Socialist parties are committed to social justice, defending trade unions, defending the poor, defending minorities, defending collective bargaining, and guarding against the abuses of capitalism, Socialist parties were able to keep their popular base in the post-WWII era, while securing the support of capitalists who understood the significance of social harmony under a social contract where labor and the lower middle class enjoyed some benefits and believed the system served them as well as the capitalists. However, the triumph of the US over the Communist bloc emboldened the neoliberals eager to crush even the remnants of Keynesian policies left over from the early Cold War. During the Reagan and Thatcher decade, the US and UK followed by other governments began to dismantle the social welfare state in order to strengthen defense and the corporate welfare state.
Socialist parties changed their agendas and went along with neoliberals by the 1990s. No matter the Socialist rhetoric while they are in the opposition or even when they are in government their policies are hardly any different than those of the conservatives representing a tiny minority of the population. The only resistance, a rather modest one at that, to neo-liberalism does not come from Socialist parties or Socialist governments whether in France, Spain, Portugal or Greece, but from nationalist regimes such as Russia, Iran, Venezuela, and a few others, and this largely for geopolitical considerations as well as domestic sociopolitical dynamics.
Socioeconomic equality, social justice and the welfare of the entire society are the themes in the debate between Socialism and capitalism. Socialist theory contends that capitalism creates and perpetuates socioeconomic inequality, social injustice and elitism against society’s collective interests. Advocates of capitalism insist equality of opportunity for the individual is of paramount importance in the social contract that guarantees safety and security from domestic and foreign enemies. Socialist theory advocates a strong central government to safeguard social justice and the interests of all people in society, while capitalism advocates a weak central government and a hegemonic capitalist class whose interests the state safeguards by maintaining inequality through fiscal and labor policy among other mechanisms. Just as Socialism entails a social order based on a value system and a code of ethics centered on human welfare, similarly, capitalism is rooted in a social order based on a value system of amassing private profit in an unfettered marketplace where the very few benefit to the detriment of the many.
From schools and churches to sports and entertainment, from market relationships to human relationships, all institutions operating under capitalism embrace its rules in order to survive. Unless it adopts the corporate model of governance and orientation that includes links with the business world, the university seeking large endowments from wealthy people and corporations, it is not likely to survive in a competitive field. It is simply not practical to have an enclave of a prototype antithetical to capitalism in just about any domain in society because the superstructure operating under capitalist rules, values, and code of ethics would ultimately crush or make irrelevant the antithetical prototype. This is something many have discovered in the last two centuries from Robert Owen and his followers that popularized the term Socialism in the 1820s to the present.
Socialists of varying types in the 19th century amid industrialization of society understood that capitalism is a new system of servitude that dehumanizes workers for the sake of amassing wealth for capitalists. There is a gap between the promise of capitalism to provide riches for all while society becomes more industrialized, scientifically, and technologically advanced, and the reality of a system creating wealth for a small percentage of people. The majority of the world’s population is left behind to dream of becoming wealthy while subsisting in daily misery, while a middle class as a buffer between the masses and capitalists helps to maintain the social order. What happens however when the middle class begins to decline as it has in the US and across much of Western Europe in the last three decades? According to the Economic Policy Institute, the bottom 90% of Americans experienced 5% income growth between 1979 and 2007, while the top 1% of Americans enjoyed 390%, illustrating how capitalism slowly destroys itself by undermining the buffer middle class.
Werner Sombart, Krieg und Kapitalismus, (1913), and Joseph Schumpeter, Capitalism, Socialism and Democracy (1942) analyzed the dynamics of capitalism’s contradictions, using the Marxian concept of “creative destruction” to explain the evolutionary process of the mode of production and contradictions inherent in the system. While they were both reacting to 19th century Industrial capitalism and the destruction of wars of imperialism that the capitalist system created ultimately leading to WWI, elements of the theoretical foundations of their works are applicable in our time.
In the early 21st century when capitalism prevails triumphantly under a neoliberal ideological and policy orientation, the fundamental question is what does the majority of the population want from a social contract? Because people are born into a capitalist system with the state as its guardian and promoter throughout the world, it is extremely difficult to bring the system down and replace it with any degree of ease as some believe. Those who enjoy power, wealth and privilege throughout the history of all civilizations rarely surrender what they enjoy for the sake of the good of society as some believe simply because it is the right thing to do for the welfare of society.
Human Nature and Capitalism
Is capitalism consistent with human nature and does it reflect it as apologists argue, or do institutions under capitalism simply reinforce human nature's atomistic and irrational aspects as detractors insist? In short, is capitalism in existence for five centuries because it closely reflects human aspirations, greed, irrational proclivities, the desire to amass material possessions and to live in a hierarchical society where there are few rich people and many are poor? Is humanity indeed carrying the seeds of evil from Adam and Eve as some in Western Christian tradition believe, or do human beings create structures that mold human behavior?
During the ancient times, whether 5th century B.C. Athens or 1st century A.D. Rome, prevailing ideas and culture that we know about today are those of the elites and have nothing to do with peasants, workers, or slaves. Culture makers were the elites, not the peasants, workers and slaves who carried out manual labor so that the leisure classes could devote time for their endeavors. The same holds true of the Middle Ages when the temporal and spiritual Lords prevailed in society in every respect controlling all institutions from church to the military and economy and determining everything from values to how people married and often whom they married. In short, the elites pass on to the rest of society values and code of ethics as a means of maintaining a given social order.
It is not much different with capitalism; in fact, it is much clearer under the capitalist system because the evidence is ubiquitous in all segments of society’s dominant culture. People have ingrained in their minds that institutions and the existing social order is “natural”. Just as the serfs in the Middle Ages believed God meant for them to be in servitude because this is what priest and Lord reinforced, similarly Plato argued that some human beings are meant to be slaves, dismissing the idea that slavery is a manmade institution resulting from private property and war. Under capitalism, the idea has been inculcated into the minds of the masses that if they are poor it is not because there is an economic system based on socioeconomic inequality and social injustice but it is simply their fault for any number of reasons, all of them having to do with personality traits and individual responsibility.
Going beyond the arguments of Thomas Hobbes, The Leviathan and John Locke, Two Treatises of Government about whether human beings are inherently evil and prone to disharmony in the state of nature (Hobbes), or inherently good and prone to rational behavior, there is the larger issue of how the dominant culture molds the minds and behavior of people in general and how the institutional structure rewards conformity and punishes dissidence. In other words, people merely wishing to survive will conform. Palmiro Togliatti pointed out (Lectures on Fascism) that a worker will accept Fascist Party membership, brushing aside ideology that may be rooted in humanist values and code of ethics.
This is a theoretical domain to which Antonio Gramsci (Os Intelectuais e a Organização da Cultura) also made significant contributions, analyzing how the dominant culture helps to perpetuate the social order. The dominant culture of our time shaped by five centuries of capitalism has the distinct advantage just as the Feudal/Manorial Christian culture of the Middle Ages prevailed to keep the vast majority believing it was God’s will for them to be oppressed and subsist in misery finding relief only in the afterlife. Despite systemic obstacles to change in society, capitalism exists in fixed time of civilizations in different parts of the world.
Like previous systems it has developed contradictions and it will begin to decline and ultimately give way to a new order. The enemy of capitalism and the culprit of its downfall is the system itself, not Communists, Socialists, jihadists, nationalists, ultra-left guerrillas, or any external force attacking and undermining it. However, this is hardly visible not only to capitalists but to workers as well who may be fatalistic, nihilistic, apathetic, or have turned to inward spiritual endeavors as a substitute for what is lacking in the social contract.
Just as the French serf in the 10th century once believed God meant for the social order to exist as it did and there was no alternative to it. Similarly, the insurance office manager in New York City and the farm worker in southern France may be convinced by the media that capitalism is above history and will exist until the sun becomes extinct. This is what the dominant culture has ingrained into the minds of the masses so this is what they hold to be dogmatic truth in the early 21st century. This is not to say that there are not those in our time, just as there were in the Middle Ages that opposed tyranny and the absence of social justice. The dominant culture silences or minimizes the impact of dissident voices about the need for social justice and an alternative social order. Not just the Holy Inquisition, but the Lords and Bishops dealt effectively with heretics of the Medieval Era, just as the modern state under capitalism has always dealt effectively with dissidents.
The masses are much more willing than many among the elites realize to bring about change in society that would end oppression, discrimination and inequality. Although academic studies show that it takes many years, in some cases decades as in China from the First Opium War (1839-1842) to the warlords (1916-1928) to Mao’s rebel movement (Jiangxi Soviet Republic of China, 1929–1934), popular uprisings ultimately do take place as history has demonstrated. In defying elites and the dominant culture, invariably they will follow an authority figure (s) challenging the status quo, as did theologian Thomas Müntzer (1489 –1525) who took a leading role in the German Peasants’ War. The same holds true from the French Revolution to the Cuban Revolution when the masses proved more willing to support social change than the elites assumed or wanted to believe. Social change is very slow while social discontinuity as Western Europe experienced from the 14th to the 16th century comes so slowly that it is hardly noticeable when a new social order and mode of production evolves.
Historical Synoptic Perspective of Capitalism vs. Socialism
Why should people vote for Socialist parties after they have proved again and again since the 1980s that they are as neoliberal as the conservative parties rooted in the Reagan-Thatcher ideology? By what right do people vote for Communist candidates after the fall of Communist regimes in the late1980s-early 1990s, and the Chinese Communist Party promoting millionaires and billionaires as the new saviors of society? How dare leftists cling to a discredited ideology associated with disruption, if not destruction of the bourgeois social order in Russia, Eastern Europe, parts of Asia, and Cuba in the 20th century?
The answer for those advocating some version of Marxism rests in the reality that the various political regimes under which capitalism has operated in the past 500 years have always left people aspiring for social justice and the goal of serving the welfare of all people instead of the privileged few, a view that the French bourgeois intellectuals promoted in the 18th century in their struggle against the privileged nobility and upper clergy. The quest for equality and social justice that the social contract must embody is as true and timeless today as when Thomas More wrote Utopia during the transition from the Feudal/Manorial social order/institutional structure to capitalism. Certainly the question of capitalism vs. socialism manifested itself in the English Peasants’ Revolt of 1381, German Peasants’ War in the 1520s, both long before the bourgeois French Revolution, manifested aspects of Socialism as an alternative.
From the French Revolution of 1789 to the environmental movement of the 21st century, people who believed in some form of Socialism have contributed to worker and child safety, slavery abolition, eight-hour work day, social security, rights of women and minorities, and much more. Above all, socialists of varying types have always struggled to keep bourgeois political parties a bit less hostile to labor, women, and minorities, fighting against tyrannical regimes that used brutal force to repress dissidents demanding human rights, and social justice as was the case with the European Revolutions of 1848 and the nascent American labor movement in the 1880s and 1890s. Socialists envisioning a society rooted in humanist values and not capital accumulation for the tiny minority endeavored to tame the capitalist system from within with reforms and from the outside with protests so that it does not leave as many children and their parents destitute in soup kitchens and in back alleys sleeping in cardboard boxes, especially during hard times of deep recessions.
Despite the fact that wars of imperialism from 1870 to 1914 led to the First World War and Second World War, which was in many respects a continuation of the first; despite the fact that capitalism is predicated on inequality and the state in many countries throughout the world, from 19th century Russia and Mexico to 20th century US has led campaigns against workers through violent means; despite that capitalism keeps promising “the promise land” only to deliver wretchedness for the masses whether in sub-Sahara Africa or rural Mississippi, its apologists continue to eulogize this as the best and only system fit for a decent society. The marketing and selling of capitalism under the neo-liberal panacea was helped enormously by the downfall of Communism, by the US campaign on terrorism that fed the defense industry, and by the idea that there is no alternative to neo-liberalism anywhere in the world, considering that China as part of the global marketplace goes along with international market rules, with the World Bank and the IMF.
Capitalism has prove resilient because it has demonstrated that it can operate under varieties of regimes, from Absolutism in early modern Europe, to parliamentary bourgeois democracy in the 19th century, to Fascism, Nazism, and varieties of authoritarian governments in the 20th century. What all of these regimes have in common is that the role of the state is not to fulfill the social contract as conceived by liberal and democratically-minded political philosophers of the Enlightenment era, but to serve, protect, and strength capitalism and its institutions in their evolving state. Since the late 19th century, finance capital with the backing of the state as an instrument of absorbing capital through the fiscal structure has as its first priority to maintain the hegemony of the markets by allowing them to operate freely during the expansionary cycle of the economy, and providing capital to sustain them amid contracting cycles.
Under such role of the state, socialism is an arch-enemy that capitalism is constantly at war against. In practical terms this means that the enemy of capitalists are the masses aspiring to a social contract that includes them – again, a bourgeois concept that the Enlightenment introduced (Emmanuel Joseph Sieyes, What is the Third Estate? 1789), but one that opened the Pandora’s box for mass politics after the European Revolutions of 1848. Does the social contract include only the privileged elites the state represents - before 1789 in France the secular and spiritual nobility, now the capitalists – and are they the nation and embodiment of the national interest, or are all people included in the social contract?
1. Is the United States really becoming a socialist country, or is this propaganda? Democrats and Republicans might differ with social spending, but do both parties support a free market without regulations?
There is absolutely no evidence that Democrats and Republicans differ on their adamant opposition to Socialism not only as regime, but even as a third political party with any legitimacy, or a social movement that has popular support. Differences in the two parties are limited to the degree that there must be regulatory mechanisms the state must impose in order to rationalize the capitalist system as far as Democrats are concerned while protecting the weaker classes and maintaining a middle class. As far as Republicans are concerned the less government the better in every domain except defense, domestic security, intelligence operations, and criminal justice system. There are Libertarian Republicans who would have no problem simply handing over government agencies, and to a degree this is a reality with outsourcing government tasks, to the private sector although this means a much higher cost to the taxpayer and much less efficient public service.
The ideological convergence of neoliberals with right wing elements that include the Christian fundamentalists and those supporting the militarist Jewish lobby is a reflection of a strategy to co-opt as much popular backing as possible to forge a popular base from which to oppose any inklings of Socialism. For a functioning representative democracy to continue serving capitalism, while projecting the image of democracy, a popular political base that includes segments from the Christian right to the petit bourgeois professionals is essential. At the same time, there is complete convergence of the elite political class and elite socioeconomic class – people in both coming from the same bourgeois class and representing the same interests.
Even the self-proclaimed progressive politicians from the FDR Democratic wing in the 1940s until Bernie Sanders in our time represent the same capitalist interests and their continued hegemony. However, they differ on cultural/lifestyle issues and the degree to which the fiscal system must be structured to sustain a sound safety net for the poor while maintaining middle class incomes. Because of the Cold War that was effectively used by both Republicans and Democrats to forge popular consensus and maintain the status quo against any movement advocating social justice and equality, and because of the “war on terror” campaign since the end of the Cold War, the American political pendulum has been swinging to the right.
Blatant racism, xenophobia, sexism, ethnocentrism, and anti-labor sentiment once camouflaged behind political correctness rhetoric are now part of the Republican public dialogue. This is not an accident or simply “politics as entertainment” as many inthe “liberal media” like to dismiss it instead of analyzing the issues in depth. On the contrary, the mainstream media, including the so-called “impartial” New York Times, Washington Post, Los Angeles Times, PBS and NPR, to mention only a few, all with a long history of helping to forge popular consensus in support of capitalism and support for militarist foreign policies in the name of liberal democracy, have helped to bring the public toward a more rightist orientation. While the media as integral part of the capitalist system can only eulogize it so it can survive, it actually presents itself to the public as “objective”, as though its coverage and news analysis represents all people and not exclusively the socioeconomic and political elites.
It is not so much the fanatic rightwing ideologues that make no secret that they approve of the Confederate flag in public buildings, but the “liberal” media presenting itself as the “progressive voice of the people” that has really been responsible for guiding the public toward an increasingly rightist orientation in domestic and foreign policy. The journalistic and moral bankruptcy of media outlets can be seen as much when they never raise social justice as a core campaign issue by questioning presidential candidates on it, any more than they question the bombing of children and women killed en masse by drone warfare across the Middle East and Africa. While many may not see a correlation between foreign policy and domestic, the reality is that the former is a reflection of the latter and neoliberal policies drive both. The US as a status quo imperial power aspiring to maintain Pax Americana status does not want structural change at home any more than it does abroad where it wishes to preserve its role as the world’s policeman.
There are many well-paid “opinion makers” that insist the US is “Socialist” because Franklin Roosevelt established a social safety net during the New Deal that many people then and today regard as a Socialist. The Democrat candidate for president in 1972 Sen. George McGovern among other Democrats including presidential candidate Bernie Sanders are also “Socialist”, although both of these individuals were well within their party’s mainstream as their voting records indicate when it came to supporting capitalism and its institutions. The US has moved so far to the right in the last four decades that it is slowly slipping toward a quasi-police state largely to push through very unpopular neoliberal policies and military solutions to international political conflicts that any voice opposing militarism and neo-liberalism is baptized “Socialism”.
Anti-Socialism rhetoric has persisted from the Gilded Age and the famous labor strike by the American Railway Union against the Pullman Palace Car Company in 1894 until the 1980s when Reagan adopted a series of anti-labor and anti-union policies the political and business establishment has fought to crush any traces labor rights that compromise capital accumulation. While the labor movement had a number of labor leaders, including Socialist Eugene Debs in the 1890s, today America has very weak trade unions and thoroughly co-opted by the Democrat Party serving big capital and adamantly opposed to any aspect of Socialism Debs advocated more than a century ago. Just in the era of Debs the entire political and justice system, including the Supreme Court always side with big business against labor.
2. Do Americans really understand socialism?
The vast majority of the American people have not studied in depth the theory and history of capitalism and socialism, nor do they really need to do so in order to understand that the current social contract does not represent them no matter what the Constitution promises about equality. The prevailing view in society is that capitalism is “natural” to human nature while Socialism is antithetical and destructive to society. This view comes not just from the vast majority of the teachers from elementary school all the way to graduate school, but from the community, church, politicians and above all the media.
Let us assume that the American people understood in varying degrees both capitalism and socialism. Does this mean that the majority would opt against capitalism? There are very well educated people, including progressive economists and social scientists in general that realize the destructive nature of capitalism and its anti-human pro-capital orientation. Yet, they cannot wait to line up behind any institution that sings the praises of established policy in any domain and represents the promotion of the existing institutional structure because only in this manner is the professional social scientist, journalist, etc. able to achieve the dream of a successful career. No matter how rational, how brilliant, how sound and humane the ideas are of an individual, they are worthless if not dangerous unless they promote or at least do not hinder the status quo. In short, capitalist institutions promote opportunism and co-optation of everyone from the politician to the musician who must commercialize her art to survive.
Raising class consciousness is paramount for political action, but this too comes from the realities of daily life just as it did for the millions who followed 20th century revolutionaries rather than reading the works of any socialist theoretician. The oppressed Chinese peasant did not need to have a copy of the Communist Manifesto next to her to know exploitation any more than a Maquiladora factory worker today in Mexico, or the American farm worker in Alabama. Working three part time jobs just to feed the family while the owners of the companies are making millions constitutes sufficient proof that the system is stacked against labor and in favor of capital. An ideological framework helps to place everything into a coherent perspective in order to mobilize popular support for a grassroots movement. This was the position of the Enlightenment thinkers before the French Revolution and it was just as true in 20th century revolutions. Marginalizing, discrediting, ridiculing, or silencing dissenting voices that demand social justice and stigmatizing them as “Socialists” because they pose a threat to the capitalist status quo allows the mass media to exert influence over public opinion in favor of capital and against labor.
The same strategy the media and politicians adopt to impose conformity on domestic issues also holds true when it comes to foreign affairs. For example, the media and mainstream political and academic establishment present the pacifist dissenter advocating a political solution to US-engendered instability in the Middle East as irrational, unrealistic, unpatriotic and dangerous to national security. Meanwhile, those advocating unilateral or multilateral military intervention are pragmatic voices of reason simply because defense companies make money when government adopts military solutions rather than diplomacy. The reward for the militarist is a high-paying consulting job, chair at one of the various think tanks funded by corporate money, advertisements in the newspaper or TV supporting military solutions, etc. People, especially young college graduates, see who is rewarded and who is left behind in society. Naturally, they follow the pursuit of self interest over what the media describes as idealism that will never make the American Dream a reality. After all, American millionaire dreams are not made by doing or saying, or writing what is in the best interests of all people in society, but only what will retain the privileges of capitalists.
Socialism and capitalism reside under the wing of democracy. Which out the two systems works best and why?
Democracy is a word the ancient Greeks invented to refer to popular sovereignty. However, when the Athenians implemented it into practice (Cleisthenes father of Athenian democracy, 508 B.C.), popular sovereignty was limited to adult males only, to the exclusion of women, foreigners and slaves. When it came to decision-makers, Athenian “radical democracy” (direct vote and participation rather electing representatives) entailed that the individual had to be somewhat well off to have an education so he could actually rise to speak in the assembly to influence the opinion of the rest. In reality, democracy was limited to the properties classes and it was always a struggle between the landowners and the merchants and shipping interests.
In 1689, England took a major step toward representative government with a strong Parliament and weak executive, but the legislative branch was the domain of the landowners, merchants, bankers and shipping interests, to the exclusion of the vast majority. While the American Revolution had a Constitution guaranteeing freedoms and liberties for all, it excluded Native Americans, women, and of course slaves, while the poor farmers and workers were hardly in position to participate and have their voice heard. The French Revolution was the first attempt in Western civilization to introduce popular sovereignty, but it quickly collapsed.
The age of mass politics of the 19th and 20th century in the Western World entailed extending voting rights to people previously marginalized, but the reigns of political power remained with the propertied classes. In short, empirical evidence throughout history does not indicate that democracy was ever a system of government that truly meant popular sovereignty to be all-inclusive and to guarantee social justice. On the contrary, history shows that democracy has been a form of government intended to serve capitalist interests, although there are immense variations between the Norwegian model that takes the working class into account and the American model that is strictly a system limited to the very wealthy with only lifestyle/cultural freedoms extended to the rest of the population.
Socialism is a very broad concept because there varieties of Socialist theories from Christian Socialism rooted in Western tradition that dates back to the Black Death, to Scientific Socialism that Marx and Engels introduced in the Communist Manifesto, coinciding with the Revolutions of 1848. In the age of mass politics, aspects of Socialism have become part of the bourgeois mainstream because the capitalist system could not survive otherwise as John Maynard Keynes realized during the Great Depression. The social fabric could not possibly hold together in the absence of the state intervening much more heavily than it ever had in the economy to absorb surplus capital in private hands, combined with deficit financing and use such resources to stimulate the capitalist economy.
This policy mix that some call “Socialist” emerged from the realization that capitalism left to its own devices would collapse without the state to buttress it. If the state withdraws its support, whether through central bank interest policy making liquidity available for businesses to borrow cheap capital, subsidies of all sorts from export to building infrastructure or facilities, as well as direct bailouts amid recessionary times, then the capitalist system would decline and ultimately fall. The only pillar maintaining it is the state that has been an instrument of redistributing income from the bottom of the socioeconomic pyramid up toward the capitalists.
The question is how long can the state remain the pillar of capitalism before collapsing? It could be argued that this could continue another two or three centuries. However, the mounting public debt not just of the US at more than 100% of GDP or of Japan at more than 200% debt to GDP ratio, but also other countries around the world will at some point entail a global crisis of such magnitude that the system will cave in. The combination of public and private debt will reach unsustainable levels to the degree that monetary inflation will reach levels not so different than what people witnessed in the Western Roman Empire during the “Third Century Crisis” that represents the start of a transition toward the Feudal/Manorial social order.
Edward Gibbon's Decline and Fall of the Roman Empire correctly asked the question how did the Roman Empire with the combination of financial, economic, political and military collapse actually survive as long as it did. Nevertheless, the Fall of Rome in the long 5th century did mark social discontinuity. I am convinced that similar patterns with some variations are applicable in the 21st century. The capitalist system will reach a point when it will be unable to operate under a pluralistic bourgeois model that accounts for a thriving middle class and it will only be able to sustain itself under a form of authoritarianism. This is already a reality in a number of countries including the US in 2015 where downward socioeconomic mobility is accompanied by an increasingly corporatist state relying on the military and police-state methods to preserve the dream of an unsustainable and waning Pax Americana.
3. What has caused more financial turmoil in the past century, corrupt forms of socialism or unrestrained capitalism?
Corruption among political parties with the label “Socialist” in France, Spain, Portugal, and Greece, among other countries including the most egregious cases in developing nations, has been an undeniable reality. Corruption in the former Soviet Republics, especially Romania but also in the USSR were indeed egregious to the degree that they undermined the moral fiber of the entire system and betrayed the ideology that indentifies corruption with bourgeois regimes. There is no doubt about systemic corruption in bureaucratic Socialist countries any more than there is in countries operating under Socialist parties but well within the capitalist economic system. For 25 years before he fled Romania, President Nicolae Ceausescu (1965-1989) had pillaged the country to the detriment of the vast majority of the people in the name of Communism.
The cult of personality cultivated by 20th century Communist leaders and the corruption that accompanied it dealt a blow to the system as much in Romania as in North Korea and China. China’s pro-capitalist Communist party is one of the most corrupt in the world and it admits the problem is real and not anti-government propaganda. In Power and Prosperity, Mancur Olson argues that communist regimes are even more prone to corruption than capitalist dictatorships. However, corruption has been an endemic part of capitalism in both private and public sectors for centuries, but the system remains in place and has not collapsed like Communism. Corruption by itself was not a catalyst to the downfall of Communism any more that it played a prominent role in Socialist parties opportunistically embracing neo-liberalism so they would be able to govern by serving capitalism even better than conservatives that do not have an ideological claim to the masses’ interests.
Unrestrained capitalism, which includes endemic corruption in both public and private sectors, has actually caused far greater damage to financial turmoil from 1637 during the “Dutch tulip market bubble” until the sub-prime disaster of the first decade in this century that caused the worst global recession since the Great Depression. Despite such shocks in the market that drive unemployment high and living standards low for the majority, apologists of capitalism insist this is the best possible of all systems to serve mankind. One reason for this is that under neo-liberalism we are re-living the Gilded Age.
During the Gild Age (1870-1900), which coincided with the American industrial revolution and the Westward Movement and Reconstruction, there was indeed enormous corruption, partly owing to lobbying. Everything from the infamous Tammany Hall (corrupt machine politics), to the manner that trusts and cartels were free to do as they pleased at the expense of society. Politics became increasingly a business of catering to business of those politically connected at the expense of the rest of society from consumers to labor organizers demanding safe working conditions and fair wages so they could live above the poverty level.
The response by Republican and Democrat Progressive Era politicians was to expand government through more and larger bureaucracies and make it more merit-based so it could better serve capitalism as a whole, including balancing the interests of disparate sectors. A major goal of the Progressives was the overall growth of the capitalist economy with the state as the pillar of support while at the same time protecting the consumer to a small degree and addressing some needs of the middle class that viewed big business as predatory. Progressivism projected as a “reform” movement managed to co-opt a segment of the population in support of capitalism.
Although the expansion of the middle class accounted for the reforms under Progressivism, Gilded Age monopolies and oligopolies continued to prevail in formulating public policy, while government remained their protector. Throughout the 1920s, lobbying became more organized and intensive. Operating in a pro-business climate, lobbyists used more high-pressure tactics to secure passage of legislation by targeting committees and regulatory commissions. With capitalism collapsing in 1929, the New Deal and WWII entailed greater regulatory measures and centralization of government. The New Deal de-radicalized the masses and co-opted them into the Democrat party in support of capitalism.
However, the trend to restore the preeminent role of business in public policy returned with the Truman administration. The Cold War followed by the “war on terror” became the pretext to permit as much laissez-faire latitude as possible so that capitalism becomes stronger. Unrestrained capitalism in the last four decades is responsible for downward social mobility and the fact that even in 2015 with 5% official unemployment rate in the US income levels are below what they were in 2007 when the Lehman Brothers scandal broke and the stock market crash followed in 2008. Unrestrained capitalism is what neoliberals want and what mainstream politicians represent.
In the first week of June 2015, the media celebrated the momentous occasion of Jimmy Diamond, head of J.P. Morgan, who joined the billionaire’s club. This is of course very typical of the media to celebrate such individuals without regard to their record of corruption and destructive actions that negative impacted not just the US economy but the world. As head of J. P. Morgan, this individual has a history of corrupt practices that range from fixing rates and manipulating interest rates to hedge funds manipulation the led to the sub-prime lending crisis of 2008, to the more recent Justice Department allegations that FIFA soccer association used this bank among others Wall Street firms to launder money.
Predatory capitalists of our time – Barbarians at the gate dressed in expensive suits - will do anything from launder drug money in the billions, promote conflict to sell weapons to governments, manipulate interest rates and currency rates and securities, and payoff government officials for favors, as Republican presidential candidate Donald Trump candidly admitted. The barbarians in suits that the media and the dominant culture revere and eulogize ad nauseam fear the people, dread popular sovereignty, and detest a social contract and policies that encompasses the interests of all and not just the socioeconomic elites.
Why do free market economists fear socialism?
Economists are a microcosm of the rest of society and reflect the dominant cultural and political influences and ideology. I do not believe that anyone should be surprised that the majority of them embrace capitalism in some form, whether under a Libertarian system, a dictatorship, a representative democracy or a social democracy with a strong social safety net. Just to survive in society and have a thriving career, economists have little choice but to embrace capitalism, otherwise, they teach and remain content with the idealism derived from their chosen profession influencing young minds.
All economists know that socialism means the means of production rest with the state on behalf of all people, or common ownership. They may not like state control or they may think it is bad for society because it promotes principles of collectivism instead of individualism, but at least they know the gist of socialism. Economists also know that socialist production is not geared to maximize profits in every sector from luxuries to weapons manufacturing, but to meet human needs. They may detest the idea because they may not believe in egalitarianism, or they may believe this is just a deceptive theory never implemented in practice as preached in writing. Economists also know that the role of the state is catalytic in so far as it determines how to meet the needs of all people collectively and not to permit production, distribution and exchange of everything from the high-end luxury market to weapons and handguns, to Hedge Funds that realize parasitic profits for a few individuals.
It is understandable that economists as apologists of capitalism fear socialism because they fear popular sovereignty. The existing system is predicated on capital accumulation and hegemony of a small percentage of the population that owns most of the wealth. As it undergoes periodic expansionary and contracting cycles more people experience downward mobility. Only state intervention through a policy mix that dilutes free market economics can reverse such a trend, something neoliberals detest and equate with Socialism. Market economists dread any policy mix that suggests the only way to save the political economy and social order is to dilute it.
In the US especially, opposition to Socialism is also a function of historical tradition rooted on the Puritan work ethic and the idea of self-reliance and individual pursuit. Government interfering to provide health and welfare for the poor is an anathema to the “Puritan work ethic” advocates who have no problem when government provides hundreds of billions to bail out banks and insurance companies, guaranteed loans, tax breaks, direct subsidies, lucrative government contracts for everything from sanitation to intelligence outsourcing, etc.
4. Do free market economists confuse the term ‘regulation with socialism’? Is regulation and socialism the same thing?
Chancellor Otto von Bismarck put into policy a number of the platforms from the German Socialists because he realized this is was the best way to preserve the status quo and pursue German capitalist interests at home and abroad. Health and disability to pension plans were Socialist demands that the chancellor whom his Liberal opponents accused of promoting “state socialism” – social welfare policies that eventually all of the Western nations adopted – put into place during the 1880s when the German Empire was thriving. Of course, I must emphasize that what 19th century German Liberals and other apologists since then call state socialism is in essence state capitalism and indeed the only effective method of preserving capitalism with relative sociopolitical harmony.
The European conservative and liberal political admission that capitalism must co-opt the masses in the age of representative democracy spread to the US during the Progressive Era, although the US did not opt for as much regulatory mechanisms under Theodore Roosevelt as it did under Franklin Roosevelt. Opponents of regulations to protect workers, the environment, consumers, children, the mentally ill and the elderly argue this is socialism. The demand an end to as many government regulations on the market as possible and removal of as many government obstacles to movement of goods, services and capital as possible, allowing the market as much freedom to play by its own rules uninterrupted by the state and acting on the laws of 'supply and demand'. On the one hand, this sounds great to the businessman because who wants red tape interfering with wealth-creation mechanisms. But is it not businesses that invite the state's intervention in: a) subsidies, b) tax breaks, c) bailouts, d) barriers on foreign goods that are competitively priced, e) intervention against monetary policies of countries enjoying competitive advantages, f) and a host of other areas from research and development paid for by taxpayers to infrastructural development?
Deregulation under neo-liberalism also means de-unionization of the labor market, canceling workers' rights achieved in the first half of the 20th century, and imposing wages that are as close to subsistence as possible. The rationale is that the US, EU, Japan, etc. must become competitive because China is rapidly out-competing the advanced countries. How do developed countries become competitive? They bring wage levels down so that they can maintain high profits and keep market share. When they speak of 'competitive', they mean lowering wages and benefits and securing tax breaks and subsidies.
5. What countries show the greatest aspects of capitalism and the greatest aspects of socialism? Of these countries, which ones seem more socially stable, the capitalist run economies or the socialist run economies?
Capitalism is and always has been an international system seeking constant expansion which means that all countries in the world, especially in the post-Communist era of globalization, are operating under its rules within varying degrees. If we exempt the unique regime and political economy of North Korea heavily dependent on China for its existence, there are no countries today that are Socialist. There are self-described Communist states like China, Vietnam, Cuba and Lao People’s Democratic Republic. However, these are totally integrated into the world capitalist system and practice capitalism with a strong presence of the state in the private sector. There are capitalist countries that have policy mix many describe as socialist, including Norway, Sweden, Holland, Belgium, Denmark, Finland and New Zealand.
The reason for the Scandinavian countries earning the socialist label is because of the considerable focus on a strong welfare state that accompanies corporate welfare in order to maintain social and political harmony. In other words, there are countries today that are much more committed to a model of democracy that takes into account the lower classes social and economic interests while supporting capitalism at the national and international levels. All Scandinavian countries and Holland of course are excellent examples of this paradigm. Even Canada has a very strong social safety net in comparison with the US. Nevertheless, Canada is very much committed to buttressing corporations and assisting them in securing market share throughout the world by supporting policies just as neoliberals in the US.
From its formative phase until the present, the market economic system has been predicated on global integration and asymmetrical relationship between the strongest economies of the core and the weaker ones in the periphery. Under neo-liberalism, the asymmetrical relationship has intensified, although the myth of the neoliberal apologists is that the gap between rich and poor countries will close rapidly. Not only is the gap wider now than it has ever been between the 20 richest nations and all the rest, but it is widening as the southern and eastern European nations are experiencing debt problems and they have been compelled to adopt austerity measures whose ultimate goal is to impose greater conformity to neoliberal policies. The structural problems that brought the periphery EU countries (Portugal, Spain and Greece) under austerity have now spread to a number of Latin American republics with Ecuador appearing as the most vulnerable and Venezuela amid falling oil prices. With depressed commodity prices, the growth-by-debt cycle is gradually now turning into an austerity nightmare for many developing nations.
The least stable countries are the capitalist ones with a weak state structure, a weak national capitalist class, externally dependent for loans and investment needed for development, and a propensity toward reliance on the police and/or military to maintain political power and social order. The weak state structure is a manifestation of external dependence or neo-colonial conditions prevailing in countries that include most of Africa, much of Latin America and parts of Asia, but also much of Eastern and southeastern Europe as well. The integration models for such countries make them vulnerable to exploitation by patron states.
According to an OECD report (2014), the best years of capitalism are over for this century at least. The developing countries will experience growth and development in the next fifty years as they industrialize and try to catch up with the advanced nations. As migrant labor moves from the poor nations to the wealthy ones by the millions in the next fifty years, the OECD expects modest growth just under 3% but also continued inequality to persist at great levels. Like most think tanks, OECD assumes rapid scientific and technological advancements that will be driving growth in the 21st century, but it also assumes the US and EU absorbing 30 million migrants so that there is no disruption in workforce and tax base needed to sustain the economy. Considering the long history of racism and xenophobia in the US and Europe, the migrant issue will contribute to sociopolitical polarization already evident in the political arena today.
The anomaly of slums next to skyscrapers in major industrial cities, including New York, Los Angeles, etc. is something that we can expect at even more dramatic rates than we have witnessed so far. “Third World” conditions are already an integral part of developed societies and will be even more so in the coming decades. This is a manifestation of socioeconomic polarization becoming more prominent that would further expose the contradictions in capitalism as the system becomes increasingly weaker.
There is a huge gap between what apologists of capitalism that promised dreams of riches for all in post-Communist world of globalization and neo-liberalism and the reality of social polarization. Mongolia is an excellent example of a society where in the recent years (Mongolian Revolution ended Communism in 1990) capitalism has created very few extremely rich people while an estimated 60% live in abject poverty not just in rural areas of nomads but in the capital Ulaanbaatar of 1.3 million where the masses are in tents next to mansions of billionaires and millionaires. Socioeconomic polarization in Mongolia is typical of many former Communist countries and it is a reflection of where society is headed in this century across the world.
The OECD report (2014) predicting increased inequality on a broad level is in direct conflict with optimistic scenarios that politicians and business people project through the media when they ask for the public’s continued support of the system. If the OECD report becomes reality and the PR “war on poverty” is in fact war on the poor because of the nature of centralization and concentration of capital, then everything from healthcare and education, to the criminal justice system and quality of life in general will deteriorate for the bottom half of the population, precipitating social polarization. At the same time, institutions increasingly will be marginalizing the masses and the state will become more authoritarian to deal with the social, economic and political challenges, thus creating new dynamics for social discontinuity.
(Braconier, H., G. Nicoletti and B. Westmore (2014), "Policy Challenges for the Next 50 Years", OECD Economic Policy Papers, No. 9, OECD Publishing, Paris.
From the Persian Empire (Achaemenid, 550-330 B.C.) to ancient Rome (27B.C.-410 A.D.), from modern imperial Japan under the Meiji Restoration (18681945) to the British Empire (mid-16th to mid-20th century), the fall of empires can be attributed to military spending outpacing economic strength on a chronic basis. This is a topic that Paul Kennedy, The Rise and Fall of the Great Powers (1989) analyzes in depth, and it will be of no surprise to anyone that the US falls within this pattern. From the war against Mexico during the Polk presidency in the 1840s until the present the US has committed itself to imperial status and like all empires in history it has been devoting resources to defense at the expense of the civilian economy.
In all wars, the arms merchants are propagating conflict, always in the name of security and lofty idealist principles rather than their profits. If Dante lived in the 20th century of mass wars, he would probably have to create a tenth circle of Hell for his Inferno where all arms merchants, arms manufacturers, politicians advocating arms buildup, opportunistic consultants, lobbyists, journalists, and academics advocating militarism whose victims are by far innocent civilians; well-worth the human sacrifice, of course, because the arms industry remains profitable, while the masses continue to believe it is for the sake of freedom, democracy and the welfare of humanity.
Just as developing the agrarian, mining, and manufacturing sectors in the 19th century propelled the US into Great Power status by the outbreak of WWI, unsustainable defense spending has eroded US economic status in the world in the 21st century. Such spending under corporate welfare and neoliberal policies will continue to erode the civilian economy as time passes and the political establishment continues to cater to the defense contractors that so handsomely reward politicians with campaign contributions, military officers with jobs after retirement, and consultants advocating for an even greater defense budget and more militaristic policies. American militarism in itself is not a catalytic dynamic for social discontinuity because capitalism is an international system and it can continue thriving in the rest of the world as it declines in the US. However, the US militarist course will force other countries to continue spending on defense as well and the cumulative effect of eroding the civilian economy on a world scale has a much bigger impact on the mode of production.
Utopian societies do not exist, and at this point in our civilization it appears highly doubtful human beings will ever be able to create a society based on complete equality because elites will always exist in some form. The question is whether a more just society rooted in social justice is even possible. How has humanity come to this point where the quarterly reports of multinational corporations are equated with societal progress? Is it simply because this is what the corporate media, mainstream bourgeois politicians, consultants and academics working for various institutions such as the Brookings Institution, and other organizations all under the corporate purview define as progress and success in civilization? If humanity and civilization have been reduced to econometric models of the IMF and Goldman Sachs that measure the wealth of the wealthy and equate them with human welfare what is humanity’s future and what does this say about our civilization?
In The Poverty of Historicism (1957), Karl Popper denied the Hegelian thesis that there are laws of human history and these are an indicator or predictor of the future. The prophet of modern neo-conservative ideology (combining capitalist economics with imperial-militarist foreign policy), Popper denied the validity of the materialist notion of interpreting history and the class struggle. Advocating a natural order of inequality and perpetual war to strengthen capitalism neo-conservatives following Popper view communitarian ethics and collective welfare as an anathema, asserting the primacy of egoism and self-interest as the ultimate moral principle antithetical to altruism that Socialists advocate.
The extent to which the morality, or more correctly immorality of egoism has been taken can be illustrated by the fact that a number of billionaires and millionaires are spending enormous sums to outfox the aging and even death. Capitalists spend more than $80 billion annually in the anti-aging industry, although there is no proven way at this juncture that human lifespan can be expanded and if so in any form of what we would qualify as “quality of life”.
Lower global poverty, gender equality, basic education and health care, and a sustainable future for all people are desirable goals of many human-centered rather than market-focused people for the past two centuries. The question is which development model can achieve such goals if the political economy is structured to serve capitalist interests and not the general welfare. Not any time in the near future, or in the next half century do I expect systemic changes in the neoliberal political economy, although the evolution toward social discontinuity is continuing.
Statistics indicate that there is regression in the areas of social progress and this is expected to grow not narrow no matter what the goals of the UN Millennium Development Goals to reduce poverty in the next decade. The socioeconomic and political (military/police) elites will do everything in their power to maintain their privileges against the broader masses of the population demanding social justice and equality. Concessions will be made to the broader masses only when absolutely necessary to preserve the status quo but the road of social discontinuity will not be interrupted as the system slowly decays from within just as did the Feudal/Manorial system that no longer served the needs of society and capitalism came to replace it.
The natural evolution of capitalism taking its course will simply crumble under its own destructive contradictions and people will remove it because they will have no choice as it will cease to serve society, minus a handful of very wealthy – 80 people currently controlling more wealth than half of the world’s population subsisting at or below poverty levels. Because capitalism is predicated on perpetuating socioeconomic and geographic inequality while promising all people that they too can be the “millionaire next door”, what will happen during the next inevitable deep recession, perhaps depression like the 1930s, when people worldwide demand systemic change and segments of the population engage in various forms of resistance from peaceful to guerrilla warfare?
Will governments acting on behalf of a capitalist system use the armed forces and the police to suppress their own citizens as they have done in the past? Will they opt for “reforming” capitalism so that wealth is not as concentrated but the system survives? Will they resort to a form of dictatorship? This is an inevitable scenario because capitalism is a system operating on expansion and contraction cycles with each cycle imposing downward socioeconomic mobility. The only question is how the political and socioeconomic elites as well as the general population in each country will react to this inevitability.
As Joseph Schumpeter argued in Capitalism, Socialism and Democracy, Socialism will prevail because of “creative destruction” that entails accumulation and annihilation of wealth under capitalism would lead to its demise. How long it would take for Socialism to take hold in society, and how fast and how far it would spread around the world are difficult questions to answer. Nevertheless, neoliberal policies are taking hold around the world and hasting the road to the demise of capitalism and the transition toward a new social order. A new synthesis of Marxism and Existentialism rooted in each country's culture, traditions, and needs of workers and not just the bourgeoisie may produce successful leftist regimes in the future. Socialism in some form, which has been around before civilization, will eventually prevail.
Jon Kofas is a retired university Professor from Indiana University.
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